Some Democratic senators have criticized the Federal Reserve for being too close to the financial giants it regulates, especially cross-hiring between the government agency and major institutions such as Goldman Sachs. The New York Fed chief insisted, however, that it wasn't a major concern.

"There are always things that are going to happen that we're not going to find," Dudley told CNBC in an on-air interview.

He did not think there was a need for institutional overhaul, and emphasized a policy in which examiners could not spend too many years at a particular institution.

"Is the U.S. banking system much safer and sounder than it was five years ago?" he said. "I think the answer is clearly yes."